Statement of Jamie P. Merisotis

Chairman Keller and Ranking Member Kildee:

Thank you for this opportunity to appear before you.

It has taken centuries for our nation to construct the higher education system of today. Step by step, the country has built public and private universities, then sought to widen their reach through legislation like the Morrill Act (1862) that promoted "the liberal and practical education of the industrial classes"; the GI Bill (1944) that provided educational benefits to World War II veterans; the Truman Commission and its support for community colleges; of course the Higher Education Act of 1965 that seeded today’s federal student aid system; and the Pell Grant (1972) program that created federal grants for low-income students.

As each successive change has opened the doors to higher education, something equally if not more important has happened at the same time: the value of a college degree—indeed, the need for a college degree—has grown even faster. But we now stand at a critical juncture. We face a great risk of creating a society cleaved along a very distinct line: those who were able to go to and complete college, and those who were not. It is true that we have always had these two groups in our society. But in the future this division will be far more stratifying, far more oppressive for those without a college degree, than we have seen historically.

So who are we really talking about? According to date from the U.S. Census Bureau, while 75% of high-income students enter college today, only 31% of low-income students do. Federal Advisory Committee on Student Financial Assistance (ACSFA) data clearly show that limited financial aid and declining affordability is already prohibiting hundreds of thousands of college-qualified high school graduates from attending a four-year institution in 2002, and over 40 percent of those students will not enter postsecondary education at all. Students with the highest test scores from the lowest socioeconomic group attend college at the same rate as students with the lowest test scores from the highest socioeconomic group.

The same story holds true for enrollments of students of color. Of traditional age students who go to college after graduating from high school, college enrollment rates are about 10 percentage points higher for whites than for African Americans or Hispanics. These gaps are even wider for adult and so-called non-traditional students.

We also need to consider the question of where students are enrolling. Former Princeton University and Mellon Foundation President William Bowen’s data shows that only 11 percent of students at selective public and private institutions come from families in the lowest income quartile (about $27,000 a year and under) and only 6 percent are first generation students.

So the discussion about federal policy and about haves and have-nots, is about so much more than having and not having. A fundamental premise of our democracy is on the line, and the democratic ideals upon which our higher education system was founded are being undermined. While the nation’s attempt to provide equal opportunity to all of its citizens has been halting at best, it has at least made progress over the past century. If we start to go backwards—shutting more and more people out of the opportunity afforded by higher education—we risk creating groups that are bitterly divided and undermining the balance that creates a nation’s sense of shared interest. These groups are our fastest growing, and therefore most important, in the battle for our nation’s economic and social well-being.

Research conducted both by my organization, the Institute for Higher Education Policy, and many other independent research groups demonstrates the dramatic benefits of the investment in higher education. These benefits have economic, social, public, and private dimensions. For example, statistics show that U.S. workers over the age of 18 with a high school diploma earn an average of $27,280 annually, while those with a bachelor’s degree who earn an average of $51,194, or nearly double. Over the course of a lifetime, those with a bachelor’s degree earn an average of almost one million dollars more than those with a high school diploma. Workers who have attended college also tend to have low rates of unemployment, and analyses of job growth and employer demands typically suggest future job growth will be increasingly concentrated in fields that require a college education. One analysis found that in 1996, 62 percent of people working in the nation’s most elite jobs—meaning the managers and professionals with the highest earnings—held a baccalaureate degree, and an additional 24 percent had some college experience.

Economic benefits also flow to society, on both a national and a regional basis. Higher earnings for college graduates result in more revenue for government coffers through increased tax collections. In addition, increasing the number of college graduates would save millions of dollars in avoided social costs every year, as a result of improved health, reduced crime, and reduced welfare and unemployment. For example, social costs for a 30-year-old White non-Hispanic woman with a college degree average $800 per year less than the costs for one with only a high school diploma. The social costs saved for 30-year-old Black and Hispanic women with a college degree is even greater, averaging $2,500. Experts estimate that the nation’s Gross Domestic Product (GDP) would increase by $231 billion—creating $80 billion worth of new tax revenues—if college participation for students of color were raised to the same level as for non-Hispanic Whites. State and federal budget deficits may discourage policymakers from investing more taxpayer money into any area, but higher education provides a significant return on that investment.

Social benefits of postsecondary education also accrue to individuals and to the public. For example, people with more education tend to have greater health/life expectancy. In 2004, 93 percent of people age 25 and older who had attained a bachelor’s degree described their health as good, very good, or excellent, compared to 82 percent of people whose highest level of education was a high school diploma. Public benefits from higher education include reduced crime rates, increased civic participation, and more charitable giving and volunteerism. For example, in 2004, 36 percent of people age 25 and older who had earned a bachelor’s degree or higher reported they had ever volunteered for or through an organization, compared to 21 percent of people whose highest level of education was a high school diploma.

Given these benefits, the American public generally sees the need for at least some college education. A 2003 survey found that 87 percent of respondents thought a high school graduate should continue on to college instead of starting a job, 37 percent said that a college degree is necessary for success, and 76 percent felt that college is more important today than it was ten years ago.

Unfortunately, it’s hard not to look at the recent federal policy environment for higher education and come to a sobering conclusion; namely, despite this evidence, the reality is that there has been very limited attention paid to the demonstrable public good that higher education contributes to our society. The debate over HEA reauthorization, the President’s budget, recent trends in funding of programs, and the disappointing $12 billion in cuts made in the reconciliation bill last year all clearly indicate that this Congress is focused narrowly on the belief that individuals are the primary beneficiaries and therefore should shoulder the burden of paying. Even with the veritable mountain of data that has been amassed to demonstrate that higher education does much more than simply provide individuals with greater earnings capacity, what we are spending most of our federal policy energy on is getting more for less, squeezing so-called inefficient institutions, and improving opportunities for middle income families, adding to what the Chronicle of Higher Education recently said is a growing divide between the haves and the have-nots.

It’s also increasingly apparent that politics has trumped policy when it comes to higher education. With the exception perhaps of the deliberate strategy being taken by the National Commission on the Future of Higher Education appointed by Secretary Spellings, there has been virtually no effort to have a reasoned public debate about higher education and its importance to the nation. There has been no serious effort to understand what happens if we leave more and more of our fastest growing and must vulnerable populations behind. This is not the way it has always been, despite our persistent cynicism in Washington. Funding for education, support for student opportunity—these have been hallmarks of bipartisan, collaborative efforts in the Congress, even in deeply partisan times in our past history—in 1998, during the Clinton impeachment debate, in 1980, with the Iran hostage crisis and crippling inflation, and in 1972, during what was then the beginning of the end for President Nixon.

Sometimes we get so caught up in the details of the policy debates—speaking a language that anyone outside of the small circle of policy technicians would find bewildering and nonsensical—that I think we lose sight of some of the simplest, most straightforward strategies. So here are just a few ideas about what I think needs to be done:

First, we must invest in need-based student aid as the best and most important way to promote access to postsecondary education. In the early 1990s, a bipartisan federal commission called the National Commission on Responsibilities for Financing Postsecondary Education (for which I served as Executive Director) issued a widely-circulated report called Making College Affordable Again. The legislation creating the commission, authored by Senator Jeffords of Vermont in the late 1980s, noted that the purchasing power of aid had been rapidly declining through the decade of the 1980s, leading to increasing concerns about access to postsecondary education. In commenting on the legislation, Senator Jeffords noted, "Without affordable postsecondary education, without national support for meaningful access for able students to take advantage of higher education opportunities, we will not be able to accomplish any of the objectives that we strive for as a nation and a leader of nations." The final report of the commission, issued in 1993, recommended several important improvements to federal student aid, many of which have subsequently been enacted. But the Commission’s major recommendation—to guarantee access to higher education for all students, based on a sliding subsidy scale tied to financial need—remains elusive. Regrettably, many of the commission’s concerns regarding affordability and accessibility resonate even more profoundly with students and families more than a decade later.

I firmly believe that investment in need-based financial aid is the best and most important contribution that the federal government can make to keeping the dream of a college education a reality for all Americans. The declining purchasing power of federal aid continues to be a critical barrier to access to higher education. The maximum Pell Grant today pays for less than half of the average price of attending a public four-year institution compared to what the maximum Pell Grant paid for in 1980. There has been no substantial increase in the Pell Grant maximum over the past five years, even as college prices continue to rise at a rate higher than inflation and family incomes. While more money is being spent on the Pell Grant program, the overwhelming reason is simply that more students qualify—that is, there are more poor people who are eligible for the program. Meaningful increases in support for the Pell Grant program should be a centerpiece of efforts to make college opportunity possible. Let’s not pretend that these efforts to do more with less, or to do less with less, will do anything to dramatically narrow the opportunity gaps. Significant investment is the only thing that has worked in the past, and it’s what needs to be done now.

We also need to look hard at student loans. Loans are not a preferred method of paying for college. But they are a reality in today’s world of college financing. The key is to simultaneously increase loan limits for some students to mitigate some of the effects of rising prices while also limiting the potential negative effects of increasing student debt. One way to meet these seemingly divergent goals is to increase loan limits modestly, especially for first and second year students, while also developing new opportunities for students to receive a low interest rate that reflects our commitment to their future and the benefits that they will provide to us as a society.

On the other hand, strategies such as increasing tax benefits to reduce tuition expenses will have little if any effect on the populations most in need of further access to higher education. Many low income students do not quality for tuition tax benefits—only about a quarter of the Hope and Lifetime tax credits go to students with adjusted gross incomes less than $30,000—and there is some evidence that many eligible students do not claim the tax benefits, especially those from minority groups. Perhaps most importantly, there is no evidence that tax benefits increase postsecondary education enrollment—a key reason to invest limited taxpayer resources.

Second, we must decisively and unequivocally support programs such as Upward Bound, Talent Search, and GEAR UP as essential components of our national access strategy. These critical programs serve as key vehicles for improving the higher education prospects of low-income, first-generation, and disabled students. The programs provide a continuum of services from pre-college to pre-graduate level study for the nation’s low-income, first-generation, and disabled students.  In FY 2006, the $828 million in funding for TRIO programs supported more than 850,000 students in over 2,700 distinct TRIO programs. Yet despite this support, less than 10 percent of the eligible populations are served by TRIO programs.

There are a total of seven TRIO programs.  The pre-college programs include Talent Search, which provides counseling and information about college admissions requirements and student financial aid to young people in grades six through 12, and Upward Bound, which works with students starting in the 9th grade to provide instruction in literature, composition, mathematics, and science on college campuses after school, on Saturdays and during the summer.  In addition, Upward Bound Math Science helps students from low-income families to strengthen math and science skills, frequently providing research opportunities for underrepresented students, while Veterans Upward Bound provides intensive basic skills development and short-term remedial courses for military veterans to help them successfully transition to postsecondary education.

At the college level, Student Support Services programs provide tutoring, counseling, and supplemental instruction to help students stay in college through the completion of a degree, and in the case of community colleges, assist them in the transfer process.  The Ronald E. McNair Post-Baccalaureate Achievement programs are designed to encourage low-income students and minority undergraduates to consider careers in college teaching as well as prepare for doctoral study. Students who participate in this program are provided with research opportunities and faculty mentors. Finally, the Educational Opportunity Centers located throughout the country primarily serve displaced or underemployed workers from low-income families with incomes.

For the last two years, the Upward Bound, Talent Search, and GEAR UP programs have inexplicably been proposed for elimination as part of the President’s budget. Given their importance to the populations most in need of college access—nearly one-third of all low-income high school graduates who actually enroll in college have been served by a TRIO program—we must not only be categorically opposed to the elimination of these programs, but we should also support significant funding increases in each of these programs and not allow the diversion of funding from these proven programs to support other education initiatives.

Third, we must strengthen the capacities of minority-serving institutions (MSIs) to educate the nation’s emerging majority populations. Tribal Colleges and Universities (TCUs), Hispanic-Serving Institutions (HSIs), and Historically Black Colleges and Universities (HBCUs) and other predominantly Black institutions represent some of the nation’s most important but underserved postsecondary education resources. Combined, more than 1.8 million students are educated by these institutions. Most MSIs have taken on the responsibility for educating students who traditionally have been denied access to adequately funded K-12 schools, especially low-income, educationally disadvantaged students. As institutions that play a major role in educating the nation’s emerging majority populations, HBCUs, HSIs, and TCUs are integral to the country’s potential and promise. Given that these institutions educate the populations that are the fastest growing in the nation, it is clear that MSIs must be recognized as a leading voice for underrepresented populations.

I believe that several important steps could be taken to strengthen the capacity of MSIs. One is to expand both the appropriation and authorization levels of Titles III and V to ensure the continued development and growth of MSIs. Additional funding is required for MSIs to reach a level of financial stability that ensures the students enrolled at these institutions receive the same quality academic programs offered by majority institutions.

Congress also could take steps to encourage improvements in the infrastructure and application of information technology at MSIs. The digital divide between better-funded and endowed majority universities and MSIs has impeded MSIs’ ability to deliver state-of-the-art programs in information technology-related areas. The Minority-Serving Institutions Digital and Wireless Technology Opportunity Act represents an enormous opportunity in this area. The legislation addresses an array of needs at MSIs by providing for both equipment and training, as well as allowing MSIs that are more advanced in their use of technology to partner with and mentor their peers. Moreover, the bill addresses systemic disenfranchisement by providing a means for partnership between MSIs and K-12 schools.

Investment in programs such as the Model Institutions for Excellence (or MIE) program, a ten-year NSF- and NASA-supported initiative that provided significant support to just six MSIs, can serve as a model for much more significant investment. The MIE schools concentrate on the recruitment and retention of students in the STEM fields (Science, Technology, Engineering, and Mathematics), counseling, academic enrichment, encouraging students to attend graduate school, and enhancing the education of their students. The results achieved by these six MIE schools has been impressive and could be replicated at other minority-serving institutions, and indeed at non-MSIs, in a way that could substantially improve our nation’s capacity in these critical areas.

Fourth, we must engage the private sector in this campaign to help students go to college, and to tell the story about the payoff of investing in higher education, as complements—not substitutes—for the critical support provided at the federal level. When Secretary of Education Spellings met with college presidents, government officials, and business leaders last year as a prelude to the establishment of the Commission on the Future of Higher Education, the discussion focused on improving higher education’s capacity to enhance the nation’s workforce and global competitiveness. Well, one way that the nation clearly does this is by helping students—the nation’s future workforce—through financial aid. Last year, we released the first-ever national study on the role of private scholarship aid in the overall financing equation, called Private Scholarships Count, and found that private scholarships are an important part of the college financing equation, for numerous reasons.

Private aid is already a significant piece of the student aid pie. We estimate that private aid totaled more than $3 billion in 2003-04, or 7 percent of all college grants awarded. Seven percent of undergraduates received private scholarships with an average value of just under $2,000, 5 percent of graduate students received private scholarships averaging just over $3,000, and 10 percent of professional students—students in fields like medicine and law--received an average of slightly more than $5,000 in private scholarship aid. So clearly, private aid is not something trivial--more than $3 billion a year makes private aid more than three times the size of the well-known federal Perkins Student Loan Program, and about one half of the entire support provided by all 50 states for student aid.

But perhaps equally as important as how much private aid exists is what it is used for. We found that private scholarships often complement the federal, state, institutional, and other aid that is given. One way they do this is by targeting primarily middle income students with support that improves their choice of institution. They also are useful in targeting support for diverse groups of students—ranging from foster children to students with unique academic talents to students who are deeply involved with their communities.

I think the private sector’s commitment and support for helping students go to college should be better recognized and understood as a valuable complement to federal aid, but never as a way of supplanting the critical federal support. One specific way to do this is via the Leveraging Educational Assistance Partnership (LEAP) program, which encourages state governments to provide state tax dollars to assist students in their states to gain the critical benefits of postsecondary education. This program could be enhanced to leverage a much greater amount of aid for students if it were used to stimulate not just state dollars for student aid, but significantly increased private sector aid in each state as well. For example, in the state of Washington the legislature has provided small challenge grants to communities to encourage the creation of local scholarship fundraising chapters. As a result over 100 new volunteer-supported, community-based scholarship chapters are now raising money each year to help their local students pursue college, university, or vocational education. The current LEAP legislation could be modified to reward those states where significant increases in student aid are produced by working in partnership with local community-based scholarship providers. This idea dovetails nicely with the important recommendations of ACSFA in its partnership proposal that has been included in the Senate HEA reauthorization bill under consideration at the Committee level.

It is important to emphasize, however, that private aid is not a substitute for government investment in need-based financial aid. Private aid plays an important role in meeting specific needs of middle income students and special populations and plays a useful role in supporting institutional choice. But it cannot ever replace what is the essential federal role of equalizing opportunity for students with financial need. The example set last year with the $12 billion in cuts to federal student aid is a disturbing development at a time when increasing access to higher education has clearly become a national security and economic competitiveness priority. Pell Grants and other federal need-based aid programs are the single most important and consistent resource for students struggling to pay for college, and should be the driving force behind any national conversation about college access and affordability. 

In these times of increasing concern about homeland security, global competitiveness, and national economic growth, investing in what we know works best—federal support for students who otherwise wouldn’t be able to go to college—is absolutely essential. Major investment in Pell Grants, reduced interest on student loans, increased support for TRIO programs and minority-serving institutions, and increased encouragement of private sector investment in grant aid are key strategies that can make a difference in the lives of today’s most marginalized and underserved students. That is, in my view, the best way that the federal government can achieve the goals of prosperity, security, and harmony for all Americans.

Thank you for this opportunity to be here. I would be pleased to answer any questions you may have.